It’s not news that your Point of Sale can drastically affect operations. However, we’re seeing a new trend—the POS boosting employee tips. In this month’s Enterprise Insight, we will discuss the different types of point of sale systems, the effect mobile terminals have on tipping, and the concurrent changes in minimum wages.

Type of Systems

Point of Sales systems can largely by classified into either legacy-based or tablet-based systems. Legacy systems are those that run on proprietary hardware that hasn’t caught up technologically to what is available to consumers. These terminals operate on touch screens that are linked to an in-house server. These systems are good for keeping data on site, but that is largely no longer necessary. Aloha and Micros are great examples.

Tablet systems use hardware such has iPads to run a cloud-based point of sale software. These tablets process orders locally and push the data into the cloud, which is then accessible from anywhere. One of the biggest selling points of these systems—namely Square, Revel, Shopkeep, and Lavu—is the ease of use and mobility of these systems. The graphical user interfaces are friendly, editing the menu doesn’t require using a Windows-based database software, and the back of house reporting is more visual than legacy systems.

Furthermore, these terminal do not need to be tied to a centrally-located server, which let’s users take orders from just about anywhere. Lastly, these systems all allow guests to sign for checks on the screen—which driving major changes in tipping practices.

iPad POS Systems Driving Up Employee Tips

Software research company Software Advice recently surveyed customers familiar with iPad point of sale systems and found compelling results: quick-tip buttons improve gratuity. Software Advice’s research found that the proximity to the server, the automatically-calculated tip amounts, and the presence of “no tip” buttons all create more frequent, more likely, and higher-value tipping.

Meanwhile, this tip creep in the industry comes at a time when two other significant changes are taking hold: an increasing minimum wage and a trend towards abolishing tips in favor of “service charges.”

New York State just passed legislation that increases the minimum wage of foodservice employees of chains with 22 or more locations to $15 per hour (by 2021.) Unfortunately for these employees, though, these operators are now less likely than ever to use iPad terminals with suggested tipping—with the increased cost of labor passed on to customers, the guests certainly won’t feel so willing to tip.

Furthermore, this comes just as the City passed legislation increasing the tipped minimum wage to $7.50. And given the recent unrest surrounding the difference in pay between service and kitchen staff, more and more full-service restaurants are prohibiting tipping and instead applying the gratuity automatically as a charge on the bill. This charge is then equally distributed amongst the entire staff, not just servers.

However, full-service restaurants will soon be operating in a more quick-service fashion once EMV payments are required, and the guests must process their cards themselves; the guest will come face-to-face with the POS terminal, just as in a quick-service setting. Perhaps the “service charge” will become preset buttons just as in the current quick-serve template, creating “service charge” creep at this end of the spectrum, as well.

To read more about Software Advice’s research, click here.

To read more about the increase in minimum wages, click here.